A leading think tank for science and technology policy has said as Washington seeks to counter a rising China, no nation is more important than India with its abundance of highly skilled technical professionals and strong political and cultural ties with the United States.
It however cautioned that “overreliance” on India as an IT services provider could become a strategic problem if major disagreements emerge between the two nations on issues such as intellectual property, data governance, tariffs, taxation, local content requirements or individual privacy.
The Information Technology and Innovation Foundation (ITIF) think-tank in a report released on Monday describes the worst and best-case scenarios.
In one, tensions between India and China are reduced and the many business synergies between these two neighbouring nations come to the fore. In this case, the heart of the global economy would shift to the east, and there would be little the United States could do about it, the report stated.
In the second scenario, the interests of India and the United States become increasingly aligned, as the economic, military, and international relations challenges from China grow. In such a case, democratic norms could prevail across most of the developed world, as developing nations start looking to a ‘Delhi model’ instead of a ‘Beijing model’, it stated.
“As America seeks to counter a rising China, no nation is more important than India, with its vast size, an abundance of highly skilled technical professionals, and strong political and cultural ties with the United States.
“But the parallels between America’s dependency on China for manufacturing and its dependency on India for IT services are striking,” said the think-tank.
According to David Moschella, a non-resident senior fellow at ITIF and co-author of the report, the same forces that increasingly divide the United States and China are now pushing the US and India closer together.
“The interplay between the United States, India, and China will shape global competition and digital innovation for years to come. While there is a wide range of possible scenarios, two things are clear: India should be an essential part of US efforts to compete with and reduce its dependence on China, and this will inevitably expand America’s global dependencies from manufacturing to services,” he said.
“America’s technology dependencies on India in the 2020s seem certain to rise. Yet it is important to know whether the United States will be dependent on a strategic partner with strong mutual interests, or on an increasingly neutral rival,” said ITIF President Robert D Atkinson, who co-authored the report with Moschella.
Much will depend on the strategic choices that the Joe Biden administration and Indian government make in the next several years. One thing is clear that economic and geopolitical stakes could not be higher, he said.
The report describes how India is making important progress in research and development, innovation centres, machine learning, analytics, product design and testing, and other areas, especially in IT and life sciences.
While leading US tech companies are well-positioned in India’s booming Internet and e-commerce marketplaces, strong local competitors are now emerging. Outside the technology sector, US companies operating in India face stiff competition from Chinese, Japanese, Korean, Indian, and other firms.
Although doing business in India is still often difficult, most large US companies have expanded significantly to having IT service providers, large operations, or their own India-based capability centres, the report stated.
